Industrial vacancy rate creeps up

An empty 450,000-square-foot truck and rail building in Selkirk pushed up the region's industrial vacancy rate during the past six months, but experts expect the market to improve in 2005.

In the Capital Region, the industrial vacancy rate increased to 9.7 percent in the fourth quarter of 2004, up from 8.4 in the second quarter, according to a new study by commercial real estate company CB Richard Ellis Albany.

Despite the increase, the industrial vacancy rate for the 10-county Capital Region, including Albany, Columbia, Fulton, Greene, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie and Warren counties, remains lower than the national average of 11 percent.

The slowdown is likely a matter of the Capital Region economy lagging behind the national economy, which appears to be improving, said Jeffrey Sperry, president of CB Richard Ellis Albany. As companies build inventory in preparation for increased consumer demand, they will need additional warehousing and other space.

For example, on Jan. 31, Golub Corp., the Rotterdam-based owner of the Price Chopper supermarket chain, announced plans for a new $15 million frozen-food distribution center in the Rotterdam Industrial Park.

Sandy Mathes, executive director of the Greene Industrial Development Agency, said Coxsackie is still seeing strong interest in its commercial and industrial sites, but companies are not yet ready to commit.

"We're in the mix for a lot of things," Mathes said. He thinks some new deals are months, not years, down the road.

According to the CB Richard Ellis Albany survey, the Capital Region has about 58 million square feet of single-story industrial space built since World War II. The survey only covers buildings of at least 10,000 square feet.

A challenge facing the local industrial market is that many existing buildings don't have the features new users want. There is no new industrial space under construction, but several new parks, including light-industrial, flex, and technology are in the planning process.

As new space with upgraded sprinkler systems, higher ceilings and larger truck-parking spaces comes online, filling older buildings will be more difficult.

Both lease and sale prices for industrial property have remained stable over the past year. Sale prices for industrial sites with existing buildings in the Albany/Colonie market range from $75,000 to $125,000 an acre; prices in other parts of the region range from $10,000 to $50,000 an acre.

Class A, or top-tier, industrial space leases for between $4 and $6 per square foot per year; Class B space between $2.25 and $4.50; and Class C between $1.50 and $3.